Texas Instruments cuts quarterly outlook

Chips firm cites weak demand from a customer, believed to be Nokia

By

JohnLetzing

SAN FRANCISCO (MarketWatch) — Shares of Texas Instruments Inc. fell nearly 5% before mostly recovering in late trading on Wednesday, after the semiconductor firm cut its outlook for both revenue and earnings in the second quarter — citing weak demand from a single customer.

Texas Instruments
TXN, +0.23%
said it now expects second-quarter revenue to be between $3.36 billion and $3.5 billion, down from the previous range of $3.41 billion to $3.69 billion.

The company said it now expects earnings to be between 51 cents and 55 cents a share, down from the prior range of 52 cents to 60 cents a share.

During a conference call with analysts, Texas Instruments head of investor relations Ron Slaymaker said the company’s reduced outlook is “due to lower demand from a single wireless customer,” believed to be Nokia.
NOK, -0.17%

“With the exception of, frankly, one customer... things are tracking to our expectations,” Slaymaker said during the call. He noted that the weakened demand is associated with Texas Instruments’s “baseband” products, which account for a dwindling portion of the company’s total revenue.

Roughly a week ago, Nokia cut its own outlook for the second quarter, based on lower-than-expected sales of, and margins associated with, its mobile devices.

Slaymaker said that Texas Instruments’s estimate of the impact on its business resulting from the recent, massive earthquake in Japan is unchanged.

Shares of Texas Instruments had fallen to $31.12 in after-hours trading, after closing the regular session at $32.67, before recovering to $32.56 following the conference call with analysts.

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